tv Bloomberg Daybreak Europe Bloomberg December 29, 2016 1:00am-2:31am EST
>> president obama and donald trump speak on the phone after complaining about roadblocks in the transition process. investment issues creep in ahead of january 20. bank of japan policy makers release concerns over your targeting. uncertainty is the new norm. a survey of british experts sees optimism as it -- at its strongest for 18 months, but caution remains the key word. copper share search to their daily limits on speculation of settlement with the boj is near.
group says no decision has been made. this as toshiba slumps again. a very warm welcome to "bloomberg daybreak: europe." , our flagship morning show. overd morning to you yusuf: in dubai yusuf:, -- to you, yusuf. we have to talk about the all-time record high for wednesday. i have the chart here for you, 16% higher than it was the day after the brexit vote. mining stocks, one of the big drivers of the search. story a big part of the and that's why got on this chart, the ftse 100 and white and expressed in dollars in the
light blue and in euros in purple. you can see it's not quite such an impressive performance when you translated into other currencies. yusuf: you are speaking of currencies that are taking a little bit of a breather, but it's been an interesting run. 23 out of 26 trading sessions of gains for the greenback. that weighing in at the moment on the dollar in crosshairs as well. if you look at what is happening in terms of expectations for 2017, citigroup is saying the rally is going to extend into next year. .5%.ntly down what's going on with u.s. futures currency future is unchanged. will they be able to reach new highs on the dow? happeningte on what's on brent, $56.11 a barrel, down .20%.
looking ahead to the meeting later this month. the expectation in the bloomberg and take a look at gold in the headlines in focus, currently at $1148 an ounce. we're back off the 11 month lows. we are getting feedback with traders telling us investors are in the goldrump price. let's get the first word news with angie lau. phone hisnt obama has successor donald trump, and trump told reporters gathered at his mar-a-lago resort in florida that we had a very nice conversation. the president-elect had alleged in specified inflammatory statements as roadblocks. that brought tensions between the two men into the open less than a month before inauguration day.
strained u.s. israeli ties have reached another low as secretary of state john kerry and prime minister benjamin netanyahu traded blame over the stalled middle east these process. in the speech yesterday in washington, john kerry said this was putting the two state solution increasingly out of reach. even as president-elect trump had bowed a fresh start, that yahoo! accused him of anti-israel bias with the u.s. beingon settlements unbalanced. >> israelis do not need to be lectured about the importance of peace by oren leaders. -- by foreign leaders. our hand has been extended in peace since day one, from the very first day. we pray for peace. we have worked for every day since then. >> britain's chief financial officers are turning optimistic as they head into the new year but they are cautious with the
cloudy economic outlook. that's according to a new report by the lord. are optimistic outweigh those that are pessimistic by the most in 18 months. with potentially two years of brexit negotiation set to begin in the new year, businesses are looking to stay flexible. the actress debbie reynolds has died at the age of 84, just a day after her daughter, kerry fisher. her son said the stress of his sister's death proved too much for his mother, who is reported to have suffered a stroke. debbie reynolds starred alongside gene kelly in singh and in the rain and was nominated for an oscar in the unsinkable molly brown. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find those stories on the bloomberg at top .
i'm angie lau. this is bloomberg. anna: let's check in on the asian market. >> it's a mixed picture here today in asia as the dollar and oil pullback. in china we are seeing gains and losses, given that were seeing industrials consumer shares pick up slightly but the shanghai composite is all the hype of the session. if it does close lower, it will be the third straight day of losses. the hang seng little changed and we do have fresh highs for the australian market. as mentioned earlier, the goal rebound were seeing is really helping miners here on the index. southeast asia were seeing some buying with indonesian shares being a third day higher. we saw the south korean government revises forecast for
growth in 2017. the big picture story here today, the topics headed for the biggest drop in more than a month. on the nikkei, nose prize that toshiba stocks are feeling the pain. is the worst performer in asia, plunging for a third day. the yen story would weigh on exporters when it comes to japanese stocks. take a closer look at what's going on with the currency. the yen a second day higher against the dollar as the currency pair falls below 117 for the first time since november 20. the dollar headed for a two-week week low as it pulls back from a 10 month high. given the weakness of the dollar, the aussie is hovering above a made low. technical indicators signaling a shift in momentum after a three-week slide. and with the yuan, slightly weaker at 6.9497.
the offshore softening for a third straight day, widening the gap. the offshore renminbi earlier reached 6.98 and the pboc said reports of the offshore yuan breaking one dollar and accurate. so again, a mixed picture here in asia. thank you so much, they're from hong kong. let's talk about the united states. -- barack obama had a phone call with donald trump after tweets accused him of hobbling the transition to his administration. said he wast, trump attempting to ignore what he called inflammatory statements and roadblocks. speaking to reporters, he said they had a nice conversation and agree to work toward a smooth transition of power in january. brendan brown joins us in the studio. a very good morning to you. transitionessing the
, the difficult transition between the obama administration and the trump administration and their divergent views on a number of geopolitical events such as israel being the latest. there's a lot we don't know about trump, and a lot we don't know about his economics. we've heard the rhetoric and we don't know the details. what are your expectations for what this does to an investment strategy in the united states? >> there are two big stories in 2017.mp one that it will be very much business as usual. hiseen transfixed on appointments to his team, and is it going to be a continuation of the same thing, private equity and everything else, or is there going to be something really new here in terms of fundamental economic reforms, deregulation, and of course, the biggest , monetaryf all
policy. the markets are rotating between those stories, probably more transfixed on the story at the moment and the big idea -- the idea of big tax cuts coming along. the more fundamental things in the background is the narrative, but it may not be as prominent in the markets. yusuf: let me pick up on that, the policy and certainty in the u.s.. this chart really showcases that. this is how the people surveyed feel about the u.s. economic policies in the time to come. you can see it that a three-year high, the highest level since october 2013. from your impressions from this incoming administration, what is the main case in terms of u.s. economic policy and 2017 under donald trump? >> the base case is we are going to see some tax cuts and that will come through as a stimulus
to the corporate sector. how much, of course, is very much in doubt. corporations are not necessarily going to ramp up their capital spending because of an unknown and possibly small change in effective tax rates. there is still going to be concerned about markets and whether this -- there is under from there. we were pro bce continuation of corporations buying back equity and paying out high dividends. where the key questions in the economic outlook is are we going to see some fundamental shift upward in capital spending by u.s. companies, or is it going to be very much a continuation of the capital spending picture that we've seen. my view on all of this is that what we're seeing in the u.s. economy now is a rebound which to a great extent does that to the put early in this year. that rebound in the u.s. and
global economies could go on for a quarter or two, but that's very much a short-term effect of that policy shift at the beginning of this year. anna: you seem skeptical as to whether any big uptick in inflation is going to be driven through by donald trump. that could have a bearing on what you think about the dollar. i got the chart that shows where the bloomberg dollar index has been since donald trump's victory. it gained 23 out of 36 trading days. how much stress is there in the dollar to come under trump comment what is it mean, how is that driven by your inflation expectations? thehe key will be relationship with europe and japan and the monetary divergent. and there is huge monetary divergence between the u.s. and what's happening in japan europe. ultimately is going to go
with the u.s. in terms of its monetary policy. the geopolitical relationship with the u.s. and the trump administration is important to japan. in the case of europe, we will see growing divergence. is going to be difficult for the ecb with all the elections coming to shift its monetary policy in line with what's happening in the u.s. after that when people are talking trade potential in 2017, the trade war we have to focus on his hostile conflict between europe and the united states. is the u.s. really going to sit back under president trump and except that germany is running the current account surpluses. strong dollara against the euro but not against the yen. yusuf: in a time not so long ago, we had the dollar strength consideration in -- of the fed minutes. is, the fed has
to take into consideration next year. to what extent is the dollar strength going to be a distraction for plans by the fed to continue to normalize monetary policy. >> i don't see the fed illicitly taking the currency into consideration, especially given this upturn in inflation. when were talking about the fed, we do have to consider who is going to be the next leader of the fed beyond janet yellen. we may see a key appointment in that as soon as the middle of the year. the currency factor is not going to be dominant or anything near as prominent as it was earlier last year. the key focus will be inflation which is going above target and of course the economy and the overall market, and the biggest uncertainty is going back to what we had the beginning of this year, the china economy. anna: we will talk about that
more later in the program. we will watch for the appointments on that front as well. coming up, bank of japan options. what was said behind closed doors at the last policy meeting of the gear? we had to tokyo to find out. optimism in the u k, cautiously upbeat in the face of >> it. we have all the details. and jamie dimon on why he thinks it's only natural for washington to take a fresh look at wall street. this is bloomberg. ♪
some positive patches. not so much for the nikkei, that is down 1.3%. let's get the bloomberg business flash. president-elect donald trump is seeking to take credit for bringing back 5000 jobs to the u.s.. billionaire said earlier this month that he intends to invest $60 billion in the u.s. using previously announced technology funds saving 60,000 jobs. >> we have accommodation sprint for 5000 jobs and that's coming from all over the world. they are coming back into the united states, which is a nice change. company. jobs in a new he's a terrific guy, and we appreciate it.
>> toshiba plunged by the most on record in intraday trading, falling as much as 26%, the most since 1974. that's after the company's credit ratings were cut following an announcement in may to write down billions of dollars of an acquisition made by u.s. unit westinghouse electric. the shares plunged yesterday after the company issued a statement that said while the final write-down has yet to be determined, it would affect earnings. to caught a shares rose by the daily limit in tokyo trading after the wall street journal reported the company is nearing a settlement with the u.s. department of justice allegations of criminal wrongdoing related to its faulty airbags. the newspaper cited people familiar with the matter saying such an agreement may include pleading guilty to criminal misconduct penalties of as much as $1 billion. said nothing is been decided. the boj decided to comment -- declined to comment.
a legal fight to expand reserves, saying the venture found gas in the north highlands, although the size of deposits has not been determined. exxon offer to buy intro oil to gain its popular new guinea reserves but its founder has gone to court to block the purchase, arguing the price is too low. that's your bloomberg business flash. much, sophie.ery bank of japan has released a summary of opinions from its most recent meeting when it raised the assessment of the economy in cap policy and change. the release shows one unidentified member saying there is a long way to go to meet the 2% inflation target and another said u.s. growth may accelerate due to expected actions by the incoming trump administration. , james,us from tokyo good morning and thanks for joining us.
opinion. statement of how does the board think the policy is going? what is the assessment as we get to your end -- year end? >> looking at the statement that came out and the minutes from the year-end meeting. the boj seems confident about policy and what's happening with the japanese economy. the further they seem to be from their 2% inflation target, the happier they seem to be. they are targeting inflation of 2%, so things are not exactly going as they planned on the inflation front. the bojhe members of board pointed out that they are still very far away from their target. the japanese economy grew in the first three quarters of the year .
hopeful of talk about more stimulus that would boost the u.s. economy, but that has also weakened the yen, which is good for pushing up the japan economy and boosting inflation here. on that front the boj seems to be generally confident about their policy settings at the moment. if 2016 has taught us anything, it's that the situation can change very quickly. to thetioned the upsides story. what's the outlook for 2017? what are they watching specifically? >> the big factor is going to be the yen. when it was appreciating at the middle of the year before the election, there was a lot more discussion on whether the bank of japan would have to do more like the yenoks has fallen quite a lot. between 116 and 120
recently. if it stays at that level, it will be good for the boj and you will probably see them staying on hold. if the fed continues to raise rates, you will see a widening interest rate differential. if that starts to put pressure on the japanese yield, the boj might have to start increasing bond purchases to keep the 10 year yield at about 0%. what happens with the currency and yields, those are the two risk factors for the boj next year. very muchs, thank you for joining us from tokyo. brendan, i have a chart of cpi over in japan highlighting the challenges there that we were hearing from james, nicely illustrating the negative number we still have on core cpi in japan. getting inflation higher is the
goal of the bank of japan's monetary policy. how do you rate their success so far, based on this chart, and where do you think it heads next? >> if you look at the core measures of cpi, you're seeing some pickup in the underlying inflation momentum, if you want to call it that. i see the inflation rate edging up to about 1% of the currency outlook that we just heard. which probably as much in line with what boj members would tell you it private. what is really going to determine both growth and inflation is the strength or weakness of the yen. this chart showcases it from , across aintelligence narrow time range. and what level does again become a problem, keeping in mind that
with an incoming u.s. administration, it might be a safe haven that would strengthen further? >> under the dynamics of the again -- of the yen is a problem in monetary policy. the present policy based on targeting yields and continuing with very aggressive monetary base expansion, it's basically inconsistent and we saw that at the last meeting where the boj actually had to reemphasize that it is intervening very heavily in creating a monetary base toward keeping the zero interest rate on long-term bonds. anna: so you say they stepped away from the you'll targeting policy. >> they gone back to where they were as become more difficult for them. given therse of 2017, priority i mentioned earlier of good relations with the trump administration, they will pull back from the rate fixing and
anna: welcome back. it's 6:30 here in london. the dollar against again, we talked about the boj and the difference of opinions we got from the central bank over in tokyo moment ago with written in brown. with brendan brown. fairly substantial movement coming through in the dollar against again. the dollars a little weaker, down .4%. a new edition of daybreak is available on your bloomberg and your mobile. let's look at some of the top stories that have made it into today's edition. the cover story is handling russia.
donald trump says the u.s. should move on rather than retaliate against the country for interfering in the 2016 election. that's as the obama administration is expected to take action soon against moscow. russia has denied accusations that it orchestrated cyber attacks during the campaign. our next story is more u.s. diplomacy. john kerry accused israel of impeding elise p saying the plan expansion of settlements is contrary to the goal of a two state solution with the palestinians. minutes later the israeli prime minister accused john kerry of anti-israel bias and said the focus was unbalanced. focusesnally, daybreak on scotland's bid to seek reassurance for eu citizens. minister to get more than 3 million european union natives living in britain certainty over their future as
she prepares to trigger brexit talks. past called on other eu leaders to guarantee the rights of britain's living outside the u.k.. of chief financial officers britain are turning optimistic, a little more than they were as they head into the new year, but they intend to be cautious amid the cloudy economic outlook. a study by deloitte found the number of cfos that are more positive about the prospects for their companies outweighs those who are more pessimistic by the most in 18 months, after the u.k. benchmark ftse 100 index hit a record high on wednesday. let's talk about where the u.k. heads next. brendan brown is still with us. we should not overplay the optimism in that deloitte survey . it's clear the optimistic -- optimism has bounced. in terms of where you see the u.k. story heading at the moment , obviously there are various threats to follow.
there's the legal challenges taking place as the role of parliament in all of this, were getting closer to the end of march when we are likely to see a little bit more detail about what it is theresa may's government wants to achieve from the brexit conversations. >> there's a realization that the key negotiations will be with germany and angela merkel with the german elections coming up next october. there will not be any big breakthroughs early on and it may await some u.s. intervention from the trump administration, a more general grand bargain. that's all very hazy. , the confidence surveys are reflecting a combination of first of all, the general à la kaz improved and that's important to the u.k. anna: what is the trump role that you see?
>> i think the deal between the u.k. in europe is going to need u.s. facilitation. the u.s. will come in as they done in the past as an enabler germany agreeing eventually to reasonable terms for brexit will be what germany is also doing in terms of the andd deal with putin avoiding a trade conflict with the united states. all of this is coming to the table and there will be more general discussion yusuf:. thatuch of this is showing cfos are resilient to what could be a new normal? political uncertainty is just part of the game and were able to just play it as it comes. >> i think that's absolutely correct. a huge political upset is out there at the end of the obama administration and we don't know what the grand deals are going to be with putin in europe.
if you are a cfo, you have to take that political uncertainty on board and concentrate on that alongside the economic and microeconomic considerations. anna: talked about whether the , in terms of the way the stock market has reacted, the ftse 100 closing at an all-time record yesterday. euros andn it into into dollars, it doesn't look quite so impressive. currency,e out the the ftse is underwater for the year. what is your perception of where we had on brexit related asset classes this year? >> new talking about the ftse, the big story is mining. i am concerned about the effect
of the breaking of the bond yields on u.s. commodities in emerging markets. that is a negative for when you look at the ftse in dollar terms. side, on balance, we may have some positive news here. there may be a breakthrough by the end of the year. on of financial sector, the calculus is changing, given the regulation, the u.s. financial sector, the u.k. doesn't have much toys by default the u.s. and deregulate also, which means the attraction of staying in the eu umbrella and that being highly regulated is no longer as attractive as it was. yusuf: where does that leave the british pound in terms of how much more restrained the currency can take and 2017 after the beating it got in 2016?
>> i would see sterling gaining some sort of haven status against the european political uncertainty, with all the elections coming along. the other thing you hear is monetary. 2017 were going to be moving to a situation where qe in the u.k. is on its way out and the speculation of what's going to follow the carney regime at the bank of england and where the that that -- whether that will be sooner and -- sooner than later. sterling someors extent next your. anna: how long does the bank of england look through the uptick in inflation that many economist says coming because of the weakness in the pound? >> i think the upturn in inflation will bring about some new perspectives on monetary policy in the u.k. and that will come from 10 downing street to some extent rather than from
within the bank of england. anna: theresa may reference that in a conference speech. >> the markets have tuned onto that in terms of endearing themselves with the incoming trump administration and not being seen to be deflating the currency. there is everything to be gained from backing away from that policy. stays withan brown us. stay with bloomberg as we will speak to the deloitte chief economist. in relation to that interesting survey in the u.k.. 2017, let's talk about what's happening in china. yusuf: it could herald a difficult balancing act for
chinese authorities as they bow with issues including high leverage and a soaring property market -- as they battle with issues. localpreciation of the currency and the high capital outlook. that's not all. record selloff in china, $7.9 trillion, that market lasting at least until the end of march. let's pick up that conversation in terms of where china is headed in 2017. brendan brown is still with us. we keep discussing these concerns about capital outflows and the weakness of the yuan. how much of a concern is it on your risk radar? >> is very much on my risk radar. if you look at the whole asset class inflation in the last few years under central-bank policies, clearly one of the big
centers has been china. itself in real estate bubbles and credits that maybe bursting, and commodities. one has to look at the strong of that at some point. that has to be on one's radar screen. anna: and the weakness in the chinese currency seems to be something many investors are pointing to is an element that could captivate the markets once again. this is transfixed markets in the past. i have a great chart that shows the yuan weakening beyond the key level. shows over various time horizons where markets see
you on weakening. >> it goes back to the incoming trump administration and what the attitude on the yua is going to ben. it could mean falling further, but it does mean less control for the common his party in china. with thehey do a deal communist leadership in beijing and go for even stricter controls on capital exports from china, which may bring some relief for the chinese currency but don't do much for economic or political freedom in china. be early on for the trump administration. yusuf: these are some major policy shifts for china. how will this affect economic growth in 2017?
will we see more of a slowdown that many of the experts are hoping for? >> it's very much related to the timing of the asset prices and the decline in china. any big shakeout's in the corporate bond bubble there which may already have started. and cooling down in the real estate sector could bring discontinuity in economic growth. it's not a question of whether growth is coming down but whether we could see 3% for a few quarters at some point by late 2017 or 2018. it's all very much related to the financial markets and what happens in the bubble. some worry about the over tightening of monetary policy in china. they may be keen to deflate some of the debt bubbles that exist in china.
they might be tempted to over tighten on monetary policy. >> monetary policy has been extremely loose in china. there's always the dilemma of how to normalize and accentuate the bubble bursting. it's late in the day to consider that question. likelihood is the that we will see a severe slowdown in china in 2017? >> i would say the likelihood of some asset price bad news and subsequent severe economic slowdown and that being known by the end of next year is 60% plus. anna: thank you very much, brendan brown, for joining us. at theup, we look best-performing metal which
yusuf: it's 10:47 in the morning in dubai but it's still latest night, 1:27 in the morning in new york. buildinge empire state decorated in some gorgeous christmas and hanukkah lights. the dollar still trading at its strongest level and currently the call justes, a little high. we will see how many people decide to join the trading
action. let's get the bloomberg business flash. >> president elect donald trump is seeking to take credit for the commitment to bring back 5000 jobs to the united states. was behind chairman the move to add workers. the japanese billionaire set earlier this month he intends to invest $50 billion in the u.s. using a previously announced technology find, creating 50,000 jobs. a combination of sprint for 5000 jobs coming from all over the world back into the united states, which is a nice change. and one wes, 3000 jobs. he's a terrific guy, and we appreciate it. >> to shiva plunged by the most on record in intraday trading, falling as much as 26%, the most
since 1974, after the company's credit ratings were cut following an announcement in may to write down billion dollars of the acquisition made by westinghouse electric. yesterdayo plunged after company issued a statement saying while the final write-down was yet to be determined, it would affect earnings. road -- rose by the daily limit after the company reported the company is preparing a settlement to resolve allegations of criminal wrongdoing related to its faulty airbags. the newspaper said such an agreement may include leading guilty to criminal misconduct and penalties of as much as $1 billion. said nothing had been decided. exxon mobil has made a natural gas discovery in new guinea where it is in a legal fight to expand its reserves. it said it's venture found gas in the north highlands, although
the size of the deposit has not been determined. earlier this year exxon operative by new guinea reserves but the founder has gone to court to block the purchase, arguing the price is too low. that's your bloomberg business flash. anna: wall street regulation is something that will be very much in focus in 2017 under a donald trump residency. jamie dimon says it's perfectly natural for washington to rethink it. he addressed the prospect of loser banking rules in exclusive conversation with megan murphy featured in a special edition of the magazine. crisisid not cause the we have three times more capital than we had back then. how much do you think we lost in nine quarters after the lehman crisis? we may 20 or $30 billion. we were not jeopardized
anywhere. we saved 30,000 jobs and we help governments, cities, schools, states, hospitals. concept, thethe american public saw a disaster. it wasn't their fault, it generally was wall street and washington. they absolutely have the right to say we want a safe and sound banking system. all the rules and regulations are good. strengthen dodd-frank, that's not accurate. there are a lot of things that had nothing to do with the crisis, zero. they were just the pet peeves of certain democrats that just put things in that they felt like. that was the bad part. barney frank and i agreed on some of the things that should been in their. anytime you have major legislation and major regulations come and they are
different, by the way, it's perfectly reasonable for people to look act and recalibrate, think it through, talk about what good it did, what damage it did, but we have not solved the housing market with mortgages. it's among seven agencies or something like that. toks and others are afraid make mortgages to first-time homebuyers, self-employed, or people with prior bankruptcies. there's nothing wrong with them. usually due to debt, divorce, disease, or loss of job. not in one case is it because of a bad person. i would look at some of the rules or regulations of reducing credit available in the system. not create more safety and soundness. i don't want to bore you with the details about that. dodd-frank is not the bible. even chuck schumer used to say look at it, recalibrated,
, while stillt accomplishing the ultimate goal. it's perfectly reasonable to look at these things and figure out where you can do better as opposed to a knee-jerk reaction. >> talking about minimum wage, it's been one of your big pushes. a nominee for labor secretary has been one of the most open advocates against raising the minimum wage. and has been quite firm about that. >> i don't think so. what i read that he said is that the government should be very careful -- careful in raising the minimum wage too high. it should be a decision made at the local level. affordf businesses could -- california could afford $15 and new york, but the rest of the world probably cannot. i would not be in favor of the federal government doing that
and imposing real hardships. share the wealth the little bit. the other thing is the earned income tax credit. that will help small business. if you are a small business that needs wages that $10 to get by, doesn't mean that you are a bad person. if that's how you survived, this will help you. it will allow you to maybe afford new benefits over time. there are solutions for this. anna: jamie dimon there speaking to megan murphy. where the conversation goes in 2017, also interesting where the -- the oil story is topical at the end of 2016 with the opec members and their friends coming up with their deal. commodities are back from the
brink and that's what this chart illustrates. raw materials cap their first annual rise since 2010 after gains in energy and metals such copper.and there as toertainty how sustainable it is in 2017, not least of which, one of the uncertainties around the opec question. yusuf: the other factor is of course donald trump and infrastructure spending, that it will create the vortex for demand across the commodities. if there was a crown for the best-performing commodity, it would be a gold crown, theoretically. perhaps it would be a zinc crown. take a look at what's , therming withzinc best-performing metal in 2016, the third-largest gain on record. as not over yet. we had supply shortages and a
cut back on mining activity. still seesley further legroom in this rally next year, about 6% above current levels. picking up on the commodities theme, we got the oil price in there and it's a little weaker this morning, down point or percent, a little bit .2 percent. opec another's meeting in january. asian equity markets a little bit stronger than they were earlier this morning. u.s. flocks -- stocks slumped yesterday and asian stocks were following the u.s., weaker earlier today. japan is still weaker, the nikkei down by 1.3%. that's one of the big reasons we see that weakness coming through
>> president obama and donald trump spoke on the phone after the president-elect complained about roadblocks in the power transition process. opinions abound. policymakers released their three minutes with concerns over express yield targeting. and the inflation target. uncertainty is the new normal. a survey of -- sees optimism at the strongest in 18 months. caution remains the keyword. shares surged and the group said
no decision has been made. this is its lumps again. again.t slumps welcome to daybreak europe. our flagship morning show. alongside and edwards in london. is given the handover we got from the session, a very mixed picture. if you take a look at what happened in european equity markets we're still missing a lot of the traditional volumes in terms -- you can see calls are lower. even more so the case for the dax. a mixed fiction -- picture. what are we looking at in terms of data?
show me the data. nationwide giving the numbers for the past month. 4.5% prices rising according to nationwide and 0.8% on the month according to nationwide. you have other data on the housing market. about tepid growth in 2017. let's have a look at the risk radar. i see some big moves coming after the dollar-yen. the yen extending its gains 116 is where we trade. and that is something that is having an impact on equity markets over in asia. we see the msci asia-pacific up led the nikkei is down by 1.3% and the topix is lower. closer to heart is
what is happening in terms of crude prices. we're looking ahead to the eia data. expected later, expectation is for a drawdown. last week that was supportive of oil prices. of .7 of 1% and pushing on from those 11 month lows. trump risk is being priced in as we speak. let's get to the first word news. anna: the bank of japan has released a summary of opinion to its most recent meeting when it raised the assessment of the economy and kept policy unchanged. the release showed one member saying there is a long way to go to meet the 2% inflation target. another said u.s. growth may accelerate due to expected actions by the incoming trump administration. strained u.s.-israeli
ties have reached a new low. trading blame over the stalled police -- peace process. that is even as president-elect -- >> is really's do not need to be lectured about the importance of peace by foreign leaders. israel's hand has been extended in peace to its neighbors from day one, from its very first day. we prayed for peace. we worked for it every day since then. the chief financial officers are turning optimistic. they intend to be cautious amid
the economic outlook according to a news report. it sounded -- found a number of cfos there more positive about the prospects of their companies outweighed by those who are pessimistic. we have two years of brexit negotiations said to begin in the new year. actress debbie reynolds has died a day after daughter's death. debbie reynolds starred alongside jean kenny and -- gene they and was nominated for unsinkable molly brown. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more top stories on the bloomberg at top . let's check in now with the
market action in asia. >> a mixed bag in asia. the dollar and oil retreats and the day of swings for chinese talks. lower. i australian shares closing a quarter of a percent lower. ,ou have the japanese markets stocks falling the most in the nikkei closing as banks and exporters we on the index. this is the yen strengthens for a second day against the dollar. let's look at what is going on with the end given that strength we are seeing. the dollar-yen clocking in a fresh session low earlier. the yen climbed to one .16. the strongest level since december 14. it can see it is trading allowed -- around that level.
toshiba is a big story where watching in asia. losing more than 40% over the past three days, closing just by almost 70% -- 7% lower. nearly wiping out all of its 87% rally this year. toshiba wass drop among the best performers on the nikkei to 25. a different tale for to caught up. sharese seeing their surge after the wall street journal reported the company was near settlement with the u.s. department of justice up to $1 billion. positionsaying that no has been made. shares rallying at 7.2%, the highest level in 20 months since april of last year. it is listed on the taiex.
local media reported the company received in order to assemble iphone 8 for apple. so again it is a tale of two stories when it comes to the weight every -- things are moving in asia. anna: thank you. let's talk about the u.s. donald trump has formed -- found barack obama. trump had previously attacked obama's direction that the u.s. abstain from a u.s. security council vote declaring israeli settlements in the west bank as illegal. and brings the composition of whether they had in -- as they head into the new administration.
good morning to you. happy new year. let's talk about what the new year might bring in the u.s. context. there is a lot we do not know about president trump. we hear a lot on twitter and we know a lot about his policy stances heading into the administration, how they will pan out and what will get through congress is another question. lot and no one a knows what he is looking to do. in terms of sentiment things have ramped up and the question is if his intended policy direction enough to break the circle weary and in terms of the current credit cycle. we have not really yet seen a theult cycle even with stress of the last couple of years. the reason that has been the case is because qe has suppressed yields and downward pressure on prices. you had this continuous circle
and the way you get away from trump's influence would give us enough of a runway to eradicate this constant reassurance of qe and i am not personally very sure that is the case. a lot of policy uncertainty coming from the upcoming administration. how do you develop a study -- strategy to make sure you do not get hit? >> that is right. time in a long time, credit investors have had to worry about that and interest rate sidehe interest of the equation no longer being a tail wind. you need to be careful about being on either end of the spectrum when it comes to investing credit. and the high-end of credit, things are increasingly
correlated with what is going on on the government bond sites. and on the low-end you have increasing problems related to commodity exposure, related to disappointing recovery rates. the way that you have to set yourself up going into 2017 has to be around how do you keep returns in the middle ground because the middle ground is an consensusis not of and not necessarily under-owned. challenges to try and pick up material returns in an area where not just investors are involved so central banks are and the way you do that is you premiums thatof are not necessarily premium related. emerging markets would be a good example. that is why you're seeing a lot of flow into that areas of market. some areas -- even brexit related amy m would be a sensible place to look but avoiding areas that require significant element of growth
and also avoiding areas that are exposed to interest-rate recs are -- risk are the things to be concerned about. chart, a very patriotic number, 1776 to give to a chart about with the dollar has been giving. we have seen the bloomberg dollar index gaining 23 ounces. year,into the end of this a strong dollar and how that can be sustained. interesting to see today that we see quite a resurgence of the japanese currency just as we see gold buying almost as if hendy -- heading into the end of the year investors are nervous about the strong dollar. into: difficult to read that. the dollar effect is huge and not least in credit where a significant portion of the universe is commodity or basic industry or energy related in
some way or form. a strong dollar does not bode well for large part of that universe, nor does it bode well for emerging markets. and so from that point of view, the question is are we concerned about continued strong dollar and what is our confidence level. i think that given what has happened to the energy complex it is not likely we will see a further significant rise from the current levels area that is partly because of the defensiveness of the companies involved. a lot of these guys are having -- had new -- near-death experiences. will put natural ceilings to these types of levels. that is very important because this 50, 55 type level in oil is pretty key to a lot of the companies we are talking about within credit. or are not profitable
around these levels. that will be important. you are worried about the strengthening dollar. we have had the likes of citigroup him out and say that there will be an extension of this rally, might even surprise the dollar. you're in for a surprise when you thought the dollar value was anywhere near an end, is that something you can subscribe to? i probably do not subscribe to that necessarily. a continuation of the dollar strength and the continuation of the oil price rally in perpetuity is unlikely. primarily because volatility will not allow it to happen. there are too many hurdles in the way. global political risk. you look at europe and the amount of events you have in 2017.
the ability for the fed to raise than three times or more the market is suggesting is a bit of a stretch considering the amount of political hurdles we have to get over between now and then. i would be looking at any major further rally in dollar strength and subsequent pain for emerging markets as an opportunity to add further to the emerging markets. anna: back to the u.s. story. i have a stock chart and i wanted to translate that into your world. this is a bullish signal on the economy. smaller stocks are outperforming the russell is doing better than the s&p 500. does that time was what you're saying in terms of the credit universe? some of those small caps and market caps fall into that.
guest: you're seeing a reflection of what is on the currency side. this is potentially ok in the short-term, longer-term, not so much. a lot of trumps policies will be negative for global trade and i think that from the global point of view, that might help some small-cap u.s. companies. in the longer term it can boost global gdp. it is reliant on things like innovation and trade. reflecting short-term policy measures that would not necessarily take much confidence from it for the longer term. yousef: we have plenty more to catch up on. .he frenzy after six straight years of anding bond sales, bankers investors are pegging 2017 as
; this is bloomberg daybreak. it is 8:20 a.m. in the morning if you are in berlin. 7:20 a.m. if you are in london. the dax suggesting futures will be weaker. weakness coming through the japanese equity session driven by renewed strength in the end. that is one of the bigger market rating stories of the morning. get the bloomberg business flash. president-elect donald trump is seeming to take credit for sprint ringing back 5000 jobs to the u.s. the japanese billionaire who he intends to
invest $50 million in the u.s. using a previously announced technology fund creating 60,000 jobs. >> we have a common nation of sprint for 5000 jobs and that is coming from all over the world and they are coming back into the united states which is a 3000 jobs, and also it is a new company. through him, a terrific guy and we appreciate it. >> toshiba plans by the most in record falling as much as twice 6%, the most in slanting 74. after the credit ratings were cut following an announcement in may right down lanes of dollars of an acquisition made by westinghouse electric. the shares launched yesterday after the company issued the statement which said that while the final write-down was yet to be determined it would affect earnings. rose by theshares
daily limit after the wall street journal reported the company is nearing a settlement newest apartment of justice to resolve allegations of criminal wrongdoing related to its faulty airbags. the -- they said such an agreement may include pleading guilty to criminal misconduct and entities as much as $1 billion. to cut us is nothing has been decided. the doj declined to comment. that is your bloomberg business flash. thank you. bankers and investors are pegging 2017 as the year the frenzy finally fades. interest-rate cycle or the rates hit a two-year high. so a lot ofa begins factors perhaps clowning in outlook and a bonanza has lasted for a few years. this must be keeping you up at night. you talked about this earlier
that this bond run might have further links to go. what is your view on that? guest: it is an interesting one that the banks are trying to dump expectations for issuance. bankers tend to do the opposite. you uphether it keeps and night, you can argue that less issuances is a net positive for fixed income existing markets because less supply fits more positive demand on what is out there. i am against the view that next year will be down because there is a lot of reasons to go next year. you have some acquisitions that will require multibillion-dollar bonds. i still think there is a lot of preemptive refinancing and opportunistic refinancings that are likely to take place
particularly that we're seeing evidence that trump has caused an inflection point on the 30 year market for government bonds. this chart here. this is the bond index spread over treasuries. as we have seen treasury yields andng since trumps victory the expectations from the fed changing, that has not resulted in a higher spread or borrow -- lower borrowing costs. be expected? guest: if you are an issue or you will be thinking there is more to be done in terms of preemptive, opportunistic issuance. they have been able to stomach --t of that over all year yield increase. and if i was a high-quality issuer in the u.s. i would be looking to come out and [indiscernible]
i would take the other side of the idea that issuance will be down significantly last -- next year. opportunistic of issuance being done. a lot of this ties back to reflation trade. we have opec about to cut out 1.8 billion barrels a day. they can see that red circle, you can see what happens with the oil price after that. where does oil go in 2017? unlikely wenk it is will see a significant rise for a couple of reasons. there is a much uncertainty on the demand side and so much political uncertainty to get through. side that the supply levels of hedging activity
around the $55 mark is so significant and also their propensity to take more at the ground at this -- these types of and ensuring survivability. i think that going back to the point about want issuance there is no the reasons is -- it is likely to remain high. looking at these sort of charts and looking at oil, there is every reason why they would look to extend the maturity profiles going into next year to make sure they have more ron wyden they did previously and right size of some of their balance sheets to more of a new normal rather than $100 which they were structured four. anna: we are learning about the that the u.s.s can cope with. great to speak to you this morning. he cohead
>> welcome to bloomberg markets, the european open. here's what we're watching this morning. talking and out. president obama calls donald trump after the republican complained about roadblocks in the transition process. gold advances and the end strengthens. creeping in ahead of the -- inauguration. uncertainty the new normal. caution remains the key word. that and the